Most people, including myself, have either experienced or are currently behind on bills. It might be worse for some of us than others. It could even go as far as foreclosure notices, electricity shutoffs and collection agencies.
No matter how deep you might be in the hole, it will never get better until you start making changes in your life.
Here are a few tips that helped me be more proactive and get out of the hole.
1 – Stop digging yourself deeper
It may not be the case for all of us but more often than not, we are easily persuaded to spend when we shouldn’t.
Coffee is a common example of day to day unnecessary spend. We all get tempted by coffee breaks but that Starbucks is only digging you deeper into the hole.
You can easily join your co-workers without buying a coffee. Think of it as an excuse to go for a walk; not an excuse to spend money.
You might think: “a $3 coffee isn’t going to make a difference, I owe way more than that”. That couldn’t be further from the truth.
In reality, all our excuses add up big time. From the $3 coffee every day and the occasional muffin to the “I didn’t have time to make lunch, I’ll buy lunch this one time”.
At the end of the day, the human brain can rationalize just about anything and saying a $3 coffee won’t make a difference is evidence of that.
Don’t rationalize spending where you shouldn’t be.
In many ways, your brain rationalizing what you want in the moment is getting you behind on bills.
2 – Spend only on the necessities
This one goes hand in hand with the previous tip. Stop spending where you shouldn’t and only spend where you HAVE TO.
How do you figure out what you have to spend money on?
Look at your day to day life and stack up everything you absolutely cannot go without. It should be a relatively straightforward exercise and the list will likely be short.
To give you an example, basics usually include:
- Mortgage or rent
- Food – groceries ONLY; eating out is not a necessity and is costly $$$
- Medical costs
- Commuting costs – can you walk? Can you use public transit? Our modern society sees owning a car as a basic need but it’s a luxury. We tend to think we NEED a car but there are plenty of other ways of getting around. More often than not, forgoing a car will be one of your biggest money savers. Think of the insurance, gas, monthly car payments, and maintenance. They stack up in a big way.
If you really think about it, all of the following are luxuries, not necessities:
- Internet – unless you work from home and need it to perform your day to day duties
- Cable – if you have internet or need it for work, consider streaming what you want to watch instead of paying for cable
- Phone – you probably only need a basic phone plan. Maybe look into downgrading your plan and you definitely don’t need to get the latest iPhone
3 – Embrace the art of negotiation
There’s really nothing wrong with negotiating a discount on your bills, asking for your interest to be brought down on your credit card or asking your bank to reverse fees.
More often than not, you’ll get what you ask for or at least be in a better position than when you started off.
So why don’t we do it more?
A lot of us are scared of rejection or feel a cultural stigma from negotiating a discount but realistically, who cares?
What’s the worse that will happen? You’ll be told no and move on with your day.
No big deal at all. We tend to think of the worst case scenario and it stops us from doing things.
More often than not, the worst case scenario is the least likely.
Trust me, you’ll be laughing when you pick up that phone and cut your bills down by simply asking. Not to mention you’ll save yourself some stress and definitely some money.
If you don’t ask, you likely won’t receive.
As a tip, people tend to respond better to a sad story than a short-tempered aggressive request. When you go to negotiate a discount, be friendly, relatable and approachable. You’ll have a much higher chance of success.
Want a little more background on negotiating? Click here.
4 – Don’t be scared of stacking it all up
More often than we should, we pretend like problems aren’t there.
In the past, when I knew I had spent more than I should have, I avoided checking my credit card. I knew deep down that I had been irresponsible.
Yet, for some reason, not looking at it or not putting an exact number to just how irresponsible let me pretend it was not a problem.
No doubt, it’s difficult to face reality but this is an essential step in taking control.
Stop avoiding your bills. Take all your debt and add up EVERYTHING you owe.
It will likely be painful but it’s a much-needed wake-up call. Don’t live in denial, you’re only making the problem worse.
Get to it and add up all your bills! Once you’ve gotten a clear picture of where you are now, you can start working on a plan to get yourself out of the hole.
It can be very scary to do and you might even have a moment of panic once you add it all up but it’s a necessary evil. This exercise will serve as a much needed wake up call just don’t let the panic take over.
Remember, this is the first step in you taking control, NOT losing it.
You got this!
If you use points 1 and 2 above, you can get a good idea of what you won’t be spending money on in the future and what your month to month necessities are expected to cost you.
Don’t forget to constantly monitor where you stand. How much you owe today and where you might be able to cut your costs even more.
Sometimes we are better at cutting costs in increments. What that means is maybe a couple months in you decide to cut back your spending on something you would have never wanted to eliminate a few months back.
Paying off debt won’t happen overnight. Be determined and patient.
Each time you pay down, congratulate yourself for your hard work. You might still be 5 bills behind but that’s a big improvement from 7 bills behind the month before.
Look for all the small victories to keep you motivated and moving in the right direction.